Market Analysis

British house prices unexpectedly fell in August, marking their first monthly decline since April, according to the Nationwide Building Society, a leading mortgage lender. Nationwide reported that house prices decreased by 0.2% compared to the previous month.

Economists surveyed by Reuters had anticipated a 0.2% monthly increase in prices.

On an annual basis, house prices were 2.4% higher than in August of the previous year, reflecting the fastest growth since December 2022—shortly after the "mini-budget" crisis that drove up borrowing costs. However, this annual rise was slightly below the median forecast of 2.9% in the poll.

Robert Gardner, Nationwide's chief economist, noted that while the housing market remains subdued, it is managing the rise in interest rates.

"Assuming the economy continues to recover steadily, as we expect, housing market activity is likely to gradually strengthen as affordability constraints ease," Gardner stated.

On August 1, the Bank of England reduced interest rates to 5% from a 16-year high of 5.25%.

Investors currently see about a one-in-four chance of the BoE cutting the Bank Rate by another quarter point in September, with a full cut expected at the November meeting.

Recent months have shown signs of renewed momentum in the housing market.

A survey released by Lloyds Bank on Friday indicated that confidence in the construction sector—which includes builders of infrastructure, commercial properties, and residential developments—rose by 14 points to 58% in August.

The Royal Institution of Chartered Surveyors reported earlier this month that its measure of expected sales over the next three months was the strongest since January 2020, just before the coronavirus pandemic hit Britain.

However, the ongoing shortage of properties on the market is expected to continue supporting house prices in the medium term.

In response, Britain's new government has pledged to expedite home-building efforts. On Thursday, it announced the formation of a group of experts tasked with accelerating the construction of housing projects stalled by planning and regulatory delays.

Paraphrasing text from "Reuters" all rights reserved by the original author.